Good news for Florida insurers: If the next "big storm" were to hit this season, they'd be ready.
In conjunction with its Annual Reinsurance Data Call, the Florida Office of Insurance Regulation (FOIR) conducted a Catastrophe Stress Test on 67 insurance companies, which evaluates the companies' ability to absorb specified hurricane scenarios. According to FOIR, the reinsurance data call tests whether an insurance company can withstand a 1-in-100 year storm, and the stress test determines how much a particular hurricane would affect the insurance company's capital and surplus.
FOIR conducts the Annual Reinsurance Data Call for companies writing property insurance in the state to test the sufficiency of the resinsurance and capital available to pay claims. This year, 112 companies participated and provided information about their capital and surplus, reinsurance purchased and other financial information.
For the stress test, 67 participating Florida property insurance companies were required to provide data showing how their surplus position would be affected by one or more historical storm scenarios: the 1947 Fort Lauderdale Hurricane, the 1921 Tampa Bay Hurricane and 2004′s Hurricanes Charley, Frances, Ivan and Jeanne. (Click the image for full resolution.)
The data provided is first run by the insurance companies themselves through a model approved by FOIR. The office then runs exposure data through the independent Florida model developed by Florida International University.
All of the insurance companies that participated in the Annual Reinsurance Data Call had sufficient reinsurance, capital and surplus to pay for the claims of its policyholders in a 1 in 100-year storm event or higher.
Similarly, all of the companies that participated in the Catastrophe Stress Test would have more than the minimum capital and surplus amounts required by law following any of the three storm event scenarios they were given.
See more about the stress test in the infographic below, and for more information, read the full Report of the Catastrophe Stress Test HERE.
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